Be Your Own Private Equity Firm

As a young investment banker, I grew up inspired by the legendary leverage buyout (LBO) stories of the 1980s. One of my favorites was Barbarians at the Gate, which chronicled the 1989 bidding war for RJR Nabisco. The deal ended when Kohlberg Kravis Roberts & Co. (KKR) “won” with a staggering $31 billion bid —nearly 90% of which was debt-financed!

Much of the leverage in Nabisco and other LBOs was funded by high-yield “junk” bonds, sold to Savings and Loan Associations. Unfortunately, these over-leveraged deals contributed to the Savings & Loan crisis of the late 1980s, which led to stricter regulations on debt issuance and capital requirements.

From LBOs to Private Equity

Falling leverage in buyouts and growing interest from pension funds reshaped the buyout business into today’s Private Equity (PE) industry. Instead of just relying on financial restructuring, PE firms now focus on operational improvements and add-on acquisitions to grow their portfolio companies.

And they’ve been wildly successful. According to Pepperdine University, PE investors in 2023 demand 25-30% annual returns from lower middle market companies. Mantra Investment Partners reported that niche PE funds averaged 38% returns throughout the 2010s.

So, what exactly do PE funds do to achieve these returns?

How Private Equity Drives Growth

PE firms transform their portfolio companies by:

  • Bringing in a new CEO or keeping the existing one accountable.
  • Replacing underperforming executives.
  • Mandating strategic planning, monthly financial reports, and projections—and holding leadership accountable to hit targets.
  • Documenting best practices and refining workflows to improve efficiency.
  • Rationalizing cost structures to generate savings.
  • Exploring market and product expansion opportunities.
  • Implementing structured sales processes.
  • Enhancing pricing strategies and focusing on higher-margin customers.

Mapping these initiatives to your business can seem daunting, but tools like the Function Ownership Chart™ can help clarify roles, responsibilities, and accountability, ensuring every function is driving results.

Why Wait for Private Equity?

Here’s what I don’t understand: why wait for a PE firm to step in and implement these changes?

Think about it. You sell a controlling stake in your business—often at a discount—to a PE firm, only for them to hold you accountable for things you could have done yourself.

Do you really need an investor to make these improvements? Or could a seasoned business coach help you achieve the same results—without giving up control of your company?

I think the latter.

That’s why I created the Summit Operating System (Summit OS®). It helps growth-minded business owners implement these improvements with the guidance of an experienced business coach.

DIY Private Equity with Summit OS

PE fund partners spend their time raising capital, buying and selling companies, and keeping investors happy. The actual work of operational improvement? It’s left to junior staffers—bright Ivy League graduates with limited real-world experience.

Do you really believe they can do better than you, armed with the help of a seasoned business coach?

By replicating the 38% annual returns reported by PE firms, you could 5x your business value in just five years. Here’s how:

  • Grow revenue by 20% annually.
  • Double your net profit margin over the same period.

Our growth-focused clients achieve these results regularly by:

  • Empowering their Team.
  • Executing like Hell.
  • Digging a Moat around their business.

A structured approach, such as using the Vision & Strategy Map™, ensures your leadership team aligns on long-term goals while staying focused on actionable steps to deliver these results.

Execution First

The first step? Execute.

Pull out all the stops in the first 45 days:

  • Core Values
  • Vision
  • Structure
  • Strategic Plan
  • Quarterly STEP Rocks™ and Rock-Steps™
  • Metrics
  • Meetings
  • Decisions
  • Actions

Tools like the Rock-Step Planner™ can break down these objectives into manageable, actionable steps, helping you maintain momentum and ensure nothing falls through the cracks.

These fundamentals will build momentum and inspire your team to embrace change. With this foundation, you could see significant growth in your business’s value within 12 months.

Let’s Make 2025 Your Best Year Yet

Now that the election is behind us, it’s time to plan for your best year yet.

Here’s an idea: get matched with a Summit OS coach to explore your goals and how we can help you achieve them.

What’s your take on this approach? Have you tried any of these strategies? Drop a comment below, or shoot me a personal note—I’d love to hear from you!